The WSJ reports that the minutes of the August FOMC suggest a FED determined to put a bright outlook on a very uncertain situation.  Basically, the “recovery” depends on an increasingly unemployed consumer deciding to spend more to take the place of federal programs.

This “blurb” from the minutes (emphasis added) as quoted at Calculated Risk shows the FED recognizes that a “recovery” is based on little more than “hope” that consumers will become more willing to spend as a result of their recent “increase in wealth” from all the bank-manipulated stock market gains and some other things the consumer could care less about:

The new estimates of real disposable income that were reported in the comprehensive revision to the national income and product accounts showed a noticeably slower increase in 2008 and the first half of 2009 than previously thought. By themselves, the revised income estimates would imply a lower forecast of consumer spending in coming quarters. But this negative influence on aggregate demand was roughly offset by other factors, including higher household net worth as a result of the rise in equity prices since March, lower corporate bond rates and spreads, a lower dollar, and a stronger forecast for foreign economic activity.

The August FOMC minutes could as easily read something like: “The Federal Reserve believes that a substantial case can be made that the consumer will win the lottery and go on a spending binge later this year”…

3 Comments on “FED minutes – below the surface”

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